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| Delaware                                                       | 26-1469061                           |
|----------------------------------------------------------------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |

| Large Accelerated filer r                                                                   | Accelerated filer                    r |
|---------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                        |                                                                                                                                  |
| Non-accelerated filer    r(Do not check if a smaller reporting company) | Smaller reporting company x                                                                                                           |

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Table of Contents

Table of Contents 

|             |                                                                                                                                                                                                                      | Page      |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|
| PART I.          | FINANCIAL INFORMATION                                                                                                                                                                                                     |      |
|             |                                                                                                                                                                                                                      |      |
| Item 1.          | Financial Statements                                                                                                                                                                                                      |  F-1 |
|             | Condensed Consolidated Balance Sheets as of June 30, 2009 (unaudited) and March 31, 2009                                                                                                                                  | F-1       |
|             | Condensed Consolidated Statements of Operations for the three months ended June 30, 2009 and 2008 and for the period from inception (January 12, 2005) through June 30, 2009 (unaudited)                             | F-2       |
|             | Condensed Consolidated Statements of Cash Flows for the three  months ended June 30,  2009 and 2008 and for the period from inception (January 12, 2005) through June  30, 2009 (unaudited) | F-3       |
|             | Notes to Condensed Consolidated Financial Statements (unaudited)                                                                                                                                                          | F-5       |
| Item 2.          | Management's Discussion and Analysis or Plan of Operation                                                                                                                                                                 | 1         |
| Item 3.          | Controls and Procedures                                                                                                                                                                                                   | 4         |
|             |                                                                                                                                                                                                                      |      |
| PART II.         | OTHER INFORMATION                                                                                                                                                                                                         |      |
|             |                                                                                                                                                                                                                      |      |
| Item 1.          | Legal Proceedings                                                                                                                                                                                                         | 5         |
| Item 2.          | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                                                               | 5         |
| Item 3.          | Defaults Upon Senior Securities                                                                                                                                                                                           | 5         |
| Item 4.          | Submission of Matters to a Vote of Security Holders                                                                                                                                                                       | 5         |
| Item 5.          | Other Information                                                                                                                                                                                                         | 5         |
| Item 6.          | Exhibits                                                                                                                                                                                                                  | 5         |
|             |                                                                                                                                                                                                                      |      |
| SIGNATURES  | 6                                                                                                                                                                                                                         |

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Table of Contents

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Table of Contents

(A Development Stage Company) 

|                                                                                                       |   |                    |       |   |          |   |
|------------------------------------------------------------------------------------------------------------|--------|-------------------------|------------|--------|---------------|--------|
|                                                                                                       |   | June 30,2009(unaudited) |       |   | March 31,2009 |   |
| Assets                                                                                                     |   |                    |       |   |          |   |
| Current assets                                                                                             |   |                    |       |   |          |   |
|    Cash and cash equivalents                                                                |   | $                       | 140        |   |          | $      | 348 |   |
|    Prepaid services and other current assets                                                |   |                    | 880        |   |          |   | - |   |
|                                                                                                       |   |                    |       |   |          |   |   |   |
|       Total current assets                                                   |   |                    | 1,020      |   |          |   | 348 |   |
|                                                                                                       |   |                    |       |   |          |   |   |   |
| Interest receivable (note 3)                                                                               |   |                    | 1,205      |   |          |   | - |   |
| Intangible assets (note 4)                                                                                 |   |                    | 615,000    |   |          |   | - |   |
| Note receivable (note 3)                                                                                   |   |                    | 150,000    |   |          |   | - |   |
| Assets from discontinued operations                                                                        |   |                    | -          |   |          |   | 36,738 |   |
|                                                                                                       |   |                    |       |   |          |   |   |   |
| Total assets                                                                                               |   | $                       | 767,225    |   |          | $      | 37,086 |   |
|                                                                                                       |   |                    |       |   |          |   |   |   |
| Liabilities and stockholders' deficit                                                                      |   |                    |       |   |          |   |   |   |
| Current liabilities                                                                                        |   |                    |       |   |          |   |   |   |
|    Accounts payable and accrued liabilities                                                 |   | $                       | 694,300    |   |          | $      | 683,607 |   |
|    Accrued interest                                                                         |   |                    | 236,455    |   |          |   | 203,664 |   |
|    Accrued officer salary and expenses                                                      |   |                    | 137,750    |   |          |   | 116,500 |   |
|    Penalty for late registration (note 8)                                                   |   |                    | 81,140     |   |          |   | 81,140 |   |
|    Preferred stock liability(note 9)                                                        |   |                    | 86,850     |   |          |   | 86,850 |   |
|    Advances payable (note 6)                                                                |   |                    | 105,603    |   |          |   | 89,742 |   |
|    Payable to related party                                                                 |   |                    | 100,000    |   |          |   | - |   |
|    Note payable (note 7)                                                                    |   |                    | 658,079    |   |          |   | 158,079 |   |
|    Convertible debentures (note 8)                                                          |   |                    | 495,539    |   |          |   | 335,405 |   |
|    Current liabilities from discontinued operations                                         |   |                    | -          |   |          |   | 286,918 |   |
|                                                                                                       |   |                    |       |   |          |   |   |   |
|       Total current liabilities                                              |   |                    | 2,595,716  |   |          |   | 2,041,905 |   |
|                                                                                                       |   |                    |       |   |          |   |   |   |
| Commitments and contingencies (note 11)                                                                    |   |                    | -          |   |          |   | - |   |
|                                                                                                       |   |                    |       |   |          |   |   |   |
| Stockholders' deficit                                                                                      |   |                    |       |   |          |   |   |   |
|    Preferred stock, 25,000,000 shares authorized, no par value:                             |   |                    |       |   |          |   |   |   |
|       Series A, 1,500,000 shares authorized, 450,000 shares outstanding      |   |                    | 363,150    |   |          |   | 363,150 |   |
|    Common stock, $0.001 par value; 300,000,000 shares authorized;                           |   |                    |       |   |          |   |   |   |
|      99,036,851 and 103,514,199 shares issued and                                 |   |                    | 99,037     |   |          |   | 103,515 |   |
|       outstanding at June 30, 2009 and March 31, 2009, respectively (note 9) |   |                    |       |   |          |   |   |   |
|    Additional paid-in capital                                                               |   |                    | 3,404,954  |   |          |   | 3,395,908 |   |
|     Deficit accumulated during the development stage                                   |   |                    | (5,695,632 | )      |          |   | (5,867,392 | ) |
|       Total stockholder's deficit                                            |   |                    | (1,828,491 | )      |          |   | (2,004,819 | ) |
|                                                                                                       |   |                    |       |   |          |   |   |   |
| Total liabilities and stockholders' deficit                                                                |   | $                       | 767,225    |   |          | $      | 37,086 |   |

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 INNOVATIVE SOFTWARE TECHNOLOGIES, INC.

(A Development Stage Company) 

|                                                                                      |   | Three MonthsEnded |        |   | Three MonthsEnded |   |        | Cumulative fromInception(January 12, 2005) to |   |
|-------------------------------------------------------------------------------------------|--------|-------------------|-------------|--------|-------------------|--------|-------------|-----------------------------------------------|--------|
|                                                                                      |   | June 30,          |        |   | June 30,          |   |        | June 30,                                      |   |
|                                                                                      |   | 2009              |        |   | 2008              |   |        | 2009                                          |   |
|                                                                                      |   |              |        |   |              |   |        |                                          |   |
| Revenue                                                                                   |   |              |        |   |              |   |        |                                          |   |
|    Revenue                                                                 |   | $                 | -           |   |              | $      | -           |                                          |   | $ | - |   |
|                                                                                      |   |              |        |   |              |   |        |                                          |   |   |   |   |
| Total revenue                                                                             |   |              | -           |   |              |   | -           |                                          |   |   | - |   |
|                                                                                      |   |              |        |   |              |   |        |                                          |   |   |   |   |
| Cost of revenue                                                                           |   |              |        |   |              |   |        |                                          |   |   |   |   |
|    Cost of revenue                                                         |   |              | -           |   |              |   | -           |                                          |   |   | - |   |
| Total cost of revenue, excluding depreciation below                                       |   |              | -           |   |              |   | -           |                                          |   |   | - |   |
|                                                                                      |   |              |        |   |              |   |        |                                          |   |   |   |   |
| Gross profit                                                                              |   |              | -           |   |              |   | -           |                                          |   |   | - |   |
|                                                                                      |   |              |        |   |              |   |        |                                          |   |   |   |   |
| Operating expenses:                                                                       |   |              |        |   |              |   |        |                                          |   |   |   |   |
|    Sales, general and administrative expenses                              |   |              | 50,180      |   |              |   | 187,670     |                                          |   |   | 2,315,407 |   |
|       Total operating expenses                              |   |              | 50,180      |   |              |   | 187,670     |                                          |   |   | 2,315,407 |   |
|                                                                                      |   |              |        |   |              |   |        |                                          |   |   |   |   |
| Operating loss                                                                            |   |              | (50,180     | )      |              |   | (187,760    | )                                             |   |   | (2,315,407 | ) |
|                                                                                      |   |              |        |   |              |   |        |                                          |   |   |   |   |
| Other income:                                                                             |   |              |        |   |              |   |        |                                          |   |   |   |   |
|    Income from change in fair value of derivative liabilities              |   |              | -           |   |              |   | -           |                                          |   |   | 169,241 |   |
|    Interest expense                                                        |   |              | (192,924    | )      |              |   | (62,018     | )                                             |   |   | (1,916,139 | ) |
|    Interest income                                                         |   |              | 1,250       |   |              |   | -           |                                          |   |   | 8,963 |   |
|    Gain on sale of fixed assets                                            |   |              | -           |   |              |   | -           |                                          |   |   | 2,849 |   |
|    Other income                                                            |   |              | -           |   |              |   | -           |                                          |   |   | 62,290 |   |
| Total other expense, net                                                             |   |              | (191,674    | )      |              |   | (62,018     | )                                             |   |   | (1,678,494 | ) |
|                                                                                      |   |              |        |   |              |   |        |                                          |   |   |   |   |
| Loss from continuing operations before provision for income taxes                         |   |              | (241,854    | )      |              |   | (249,778    | )                                             |   |   | (3,993,901 | ) |
|                                                                                      |   |              |        |   |              |   |        |                                          |   |   |   |   |
|    Provision for taxes                                                     |   |              | -           |   |              |   | -           |                                          |   |   | - |   |
|                                                                                      |   |              |        |   |              |   |        |                                          |   |   |   |   |
| Net loss from continuing operations                                                  |   |              | (241,854    | )      |              |   | (249,778    | )                                             |   |   | (3,993,901 | ) |
| Net income (loss)from discontinued operations and gain on sale of discontinued operations |   |              | 413,614     |   |              |   | (29,081     | )                                             |   |   | (1,701,731 | ) |
|                                                                                      |   |              |        |   |              |   |        |                                          |   |   |   |   |
| Net income  (loss)                                                              |   | $                 | 171,760     |   |              | $      | (278,859    | )                                             |   | $ | (5,695,632 | ) |
|                                                                                      |   |              |        |   |              |   |        |                                          |   |   |   |   |
| Undeclared preferred stock dividends                                                      |   |              | (4,500      | )      |              |   | (4,500      | )                                             |   |   | (54,000 | ) |
|                                                                                      |   |              |        |   |              |   |        |                                          |   |   |   |   |
| Income (loss) applicable to common stockholders                                           |   | $                 | 167,260     |   |              | $      | (283,359    | )                                             |   | $ | (5,749,632 | ) |
|                                                                                      |   |              |        |   |              |   |        |                                          |   |   |   |   |
| Net loss per share from continuing operations- basic                                      |   | $                 | (0.00       | )      |              | $      | (0.00       | )                                             |   | $ | (0.05 | ) |
| Net loss per share from continuing operations- diluted                                    |   | $                 | (0.00       | )      |              | $      | (0.00       | )                                             |   | $ | (0.05 | ) |
| Net income (loss) per share from discontinued operations - basic                     |   | $                 | 0.00        |   |              | $      | (0.00       | )                                             |   | $ | (0.02 | ) |
| Net income (loss) per share from discontinued operations - diluted                        |   | $                 | 0.00        |   |              | $      | (0.00       | )                                             |   | $ | (0.02 | ) |
|                                                                                      |   |              |        |   |              |   |        |                                          |   |   |   |   |
| Weighted average shares outstanding -                                                     |   |              |        |   |              |   |        |                                          |   |   |   |   |
|    Basic                                                                   |   |              | 102,972,981 |   |              |   | 101,637,276 |                                          |   |   | 85,052,610 |   |
|    Diluted                                                                 |   |              | 252,972,981 |   |              |   | 101,637,276 |                                          |   |   | 85,062,610 |   |

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                                         |   | For the ThreeMonths Ended |          |   | For the ThreeMonths Ended |   |     | Cumulativefrom Inception(January 12, 2005) to |   |
|--------------------------------------------------------------------------------------------------------------|--------|---------------------------|---------------|--------|---------------------------|--------|----------|-----------------------------------------------|--------|
|                                                                                                         |   | June 30,                  |          |   | June 30,                  |   |     | June 30,                                      |   |
|                                                                                                         |   | 2009                      |          |   | 2008                      |   |     | 2009                                          |   |
|                                                                                                         |   |                      |          |   |                      |   |     |                                          |   |
| Cash flows from operating activities:                                                                        |   |                      |          |   |                      |   |     |                                          |   |
|    Net income (loss) from discontinued operations and gain on sale of discontinued operations |   | $                         | 413,614       |   |                      | $      | (29,081  | )                                             |   | $ | (1,701,731 | ) |
|    Net income (loss) from continuing operations                                               |   |                      | (241,854      | )      |                      |   | (249,778 | )                                             |   |   | (3,993,907 | ) |
|                                                                                                         |   |                      |          |   |                      |   |     |                                          |   |   |   |   |
|   Adjustments to reconcile net income (loss ) to net                                          |   |                      |          |   |                      |   |     |                                          |   |   |   |   |
|   cash used in operating activities:                                                               |   |                      |          |   |                      |   |     |                                          |   |   |   |   |
|   Depreciation and amortization                                                                    |   |                      | -             |   |                      |   | 304      |                                          |   |   | 31,587 |   |
|   Gain on sale of assets                                                                           |   |                      | -             |   |                      |   | -        |                                          |   |   | 2,851 |   |
|   Stock  based compensation                                                              |   |                      | 2,999         |   |                      |   | 75,925   |                                          |   |   | 878,826 |   |
|   Issuance of shares to officer for accrued payroll                                                |   |                      | -             |   |                      |   | -        |                                          |   |   | 127,000 |   |
|   Notes payable issued for expenses paid by affiliates and third parties                           |   |                      | -             |   |                      |   | -        |                                          |   |   | 258,605 |   |
|   Amortization of deferred gain on sale of assets                                                  |   |                      | -             |   |                      |   | -        |                                          |   |   | (872 | ) |
|   Services paid in common stock                                                                    |   |                      | -             |   |                      |   | -        |                                          |   |   | 146,560 |   |
|   Amortization of convertible debt discount                                                        |   |                      | 160,134       |   |                      |   | 33,608   |                                          |   |   | 1,413,823 |   |
|   Change in fair value of derivative liabilities                                                   |   |                      | -             |   |                      |   | -        |                                          |   |   | (169,241 | ) |
|   Amortization of deferred financing costs                                                         |   |                      | -             |   |                      |   | -        |                                          |   |   | 232,199 |   |
|   Amortization of the discount on preferred stock liability                                        |   |                      | -             |   |                      |   | -        |                                          |   |   | 4,571 |   |
|   Net change in operating assets and liabilities:                                                  |   |                      |          |   |                      |   |     |                                          |   |   |   |   |
|         Interest receivable                                          |   |                      | (1,205        | )      |                      |   | -        |                                          |   |   | (1,205 | ) |
|         Prepaid expenses and other current assets                    |   |                      | (880          | )      |                      |   | -        |                                          |   |   | 9,920 |   |
|         Deposits                                                     |   |                      | -             |   |                      |   | -        |                                          |   |   | 1,000 |   |
|         Accounts payable and accrued expenses                        |   |                      | 64,857        |   |                      |   | 94,707   |                                          |   |   | (88,983 | ) |
|         Customer deposits                                            |   |                      | -             |   |                      |   | -        |                                          |   |   | 30,301 |   |
|                                                                                                         |   |                      |          |   |                      |   |     |                                          |   |   |   |   |
| Cash used in operating activities - continuing operations                                                    |   |                      | (15,949       | )      |                      |   | (45,224  | )                                             |   |   | (1,188,389 | ) |
| Discontinued operations                                                                                      |   |                      | (120          | )      |                      |   | 79,042   |                                          |   |   | (1,032,920 | ) |
|    Net cash (used in) provided by operating activities                                   |   |                      |  (16,069 | )      |                      |   | 33,818   |                                          |   | (2,221,309 | ) |
|                                                                                                         |   |                      |          |   |                      |   |     |                                          |   |   |   |   |
| Cash flows from investing activities:                                                                        |   |                      |          |   |                      |   |     |                                          |   |   |   |   |
|    Purchase of fixed assets                                                                   |   |                      | -             |   |                      |   | -        |                                          |   |   | (126,599 | ) |
|    Proceeds from sale-leaseback of property and equipment                                     |   |                      | -             |   |                      |   | -        |                                          |   |   | 125,000 |   |
|    Increase in deferred financing costs                                                       |   |                      | -             |   |                      |   | -        |                                          |   |   | (156,200 | ) |
|                                                                                                         |   |                      |          |   |                      |   |     |                                          |   |   |   |   |
| Cash used in investing activities - continuing operations                                                    |   |                      | -             |   |                      |   | -        |                                          |   |   | (157,799 | ) |
| Discontinued operations                                                                                      |   |                      | -             |   |                      |   | (8,985   | )                                             |   |   | (107,484 | ) |
|    Net cash used in investing activities                                                      |   |                      | -             |   |                      |   | (8,985   | )                                             |   |   | (265,283 | ) |
|                                                                                                         |   |                      |          |   |                      |   |     |                                          |   |   |   |   |
| Cash flows from financing activities:                                                                        |   |                      |          |   |                      |   |     |                                          |   |   |   |   |
|    Stock issued for cash                                                                      |   |                      | -             |   |                      |   | -        |                                          |   |   | 113,000 |   |
|    Proceeds from notes payable                                                                |   |                      | -             |   |                      |   | -        |                                          |   |   | 427,969 |   |
|    Principal payments on notes payable                                                        |   |                      | -             |   |                      |   | -        |                                          |   |   | (30,000 | ) |
|    Proceeds from cash advances, net of repayments                                             |   |                      | 15,861        |   |                      |   | 50,000   |                                          |   |   | 261,114 |   |
|    Proceeds from convertible debentures                                                       |   |                      | -             |   |                      |   | -        |                                          |   |   | 1,663,500 |   |
|    Cash acquired in the reverse acquisition of Innovative                                     |   |                      | -             |   |                      |   | -        |                                          |   |   | 51,149 |   |
|                                                                                                         |   |                      |          |   |                      |   |     |                                          |   |   |   |   |
| Cash used in financing activities - continuing operations                                                    |   |                      | 15,861        |   |                      |   | 50,000   |                                          |   |   | 2,486,732 |   |
| Discontinued operations                                                                                      |   |                      | -             |   |                      |   | (13,661  | )                                             |   |   | (71,430 | ) |
|    Net cash provided by financing activities                                                  |   |                      | 15,861        |   |                      |   | 36,339   |                                          |   |   | 2,415,302 |   |
|                                                                                                         |   |                      |          |   |                      |   |     |                                          |   |   |   |   |
|                                                                                                         |   |                      |          |   |                      |   |     |                                          |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents                                                         |   |                      | (208          | )      |                      |   | 61,172   |                                          |   |   | 140 |   |
|                                                                                                         |   |                      |          |   |                      |   |     |                                          |   |   |   |   |
| Cash and cash equivalents at beginning of period                                                             |   |                      | 348           |   |                      |   | 15,016   |                                          |   |   | - |   |
|                                                                                                         |   |                      |          |   |                      |   |     |                                          |   |   |   |   |
| Cash and cash equivalents at end of period                                                                   |   | $                         | 140           |   |                      | $      | 76,188   |                                          |   | $ | 140 |   |

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(A Development Stage Company) 

| Supplemental disclosures of cash flow information:                                |   |   |    |   |   |   |   |   |   |
|-----------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|
|                                                                              |   |   |    |   |   |   |   |   |   |
| Cash paid during the period for:                                                  |   |   |    |   |   |   |   |   |   |
| Interest                                                                          |   | $      | -       |   |   | $      | -      |   |   | $ | 46,516 |   |
|                                                                              |   |   |    |   |   |   |   |   |   |   |   |   |
| Taxes                                                                             |   | $      | -       |   |   | $      | -      |   |   | $ | - |   |
|                                                                              |   |   |    |   |   |   |   |   |   |   |   |   |
| Issuance of common stock for acquisition                                          |   | $      | -       |   |   | $      | -      |   |   | $ | 440,000 |   |
|                                                                              |   |   |    |   |   |   |   |   |   |   |   |   |
| Issuance of common stock in exchange for debt                                     |   | $      | -       |   |   | $      | -      |   |   | $ | 1,114,602 |   |
|                                                                              |   |   |    |   |   |   |   |   |   |   |   |   |
| Assets acquired under capital lease                                               |   | $      | -       |   |   | $      | -      |   |   | $ | 136,512 |   |
|                                                                              |   |   |    |   |   |   |   |   |   |   |   |   |
| Fixed assets exchanged for lease payment                                          |   | $      | -       |   |   | $      | -      |   |   | $ | 2,490 |   |
|                                                                              |   |   |    |   |   |   |   |   |   |   |   |   |
| Issuance of common stock to retire notes payable - affiliate                      |   | $      | -       |   |   | $      | -      |   |   | $ | 22,337 |   |
|                                                                              |   |   |    |   |   |   |   |   |   |   |   |   |
| Charge warrants and embedded derivative liabilities                               |   |   |    |   |   |   |   |   |   |   |   |   |
|    to additional paid-in capital                                   |   | $      | -       |   |   | $      | -      |   |   | $ | 1,952,451 |   |
|                                                                              |   |   |    |   |   |   |   |   |   |   |   |   |
| Convertible debt issued for financing costs                                       |   | $      | -       |   |   | $      | -      |   |   | $ | 44,000 |   |
|                                                                              |   |   |    |   |   |   |   |   |   |   |   |   |
| Issuance of shares to officers for accrued payroll                                |   | $      | -       |   |   | $      | 66,500 |   |   | $ | 127,000 |   |
|                                                                              |   |   |    |   |   |   |   |   |   |   |   |   |
| Issuance of shares for accrued legal payable                                      |   | $      | -       |   |   | $      | -      |   |   | $ | 20,000 |   |
|                                                                              |   |   |    |   |   |   |   |   |   |   |   |   |
| Reclassification of preferred stock to liability                                  |   | $      | -       |   |   | $      | -      |   |   | $ | 86,850 |   |
|                                                                              |   |   |    |   |   |   |   |   |   |   |   |   |
| Issuance of note payable and payable to related party for Web Channel acquisition |   | $      | 600,000 |   |   | $      | -      |   |   | $ | 600,000 |   |
|                                                                              |   |   |    |   |   |   |   |   |   |   |   |   |
| Issuance of common stock warrants in Web Channel acquisition                      |   | $      | 15,000  |   |   | $      | -      |   |   | $ | 15,000 |   |

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NOTES 

| (1)   | A promissory note in the amount of $1,000,000. The note will have a term of two years and will bear interest at a rate of 10% per year. The note is collateralized with all assets of AcXess and has an acceleration clause for any material default. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)   | A license agreement grant that gives the Company a non-exclusive worldwide right and license products under Axcess’ patents relating to Business Continuity (BC) solutions.                                                                     |

| (3)   | The return of 4,477,292 shares of common stock and the cancellation of  fully vested options to purchase 5,978,349 shares of the Company’s common stock. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (1)   | all 4,477,292 shares of the Company’s common stock held by the AcXess Managers; |
|-----------------|---------------------------------------------------------------------------------------|

| (2)   | the cancellation of options to purchase 5,978,349 shares of the Company’s common stock held by the AcXess Managers; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------|

| (3)   | a Secured Promissory Note ("the Note") in the principal amount of $500,000, with a three year maturity date, an 8% interest rate, a prepayment discount schedule that allows for gradually decreasing discounts beginning with a maximum prepayment discount of $350,000 if $150,000 is paid within three months of the June 19, 2009 issue date,and a pledge of all of the assets of AcXess as security for the Note, as specified in a separate Security Agreement.  The Company has recorded a $150,000 note receivable as of June 30, 2009, as this is the amount that is likely to be received. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)   | a release from AcXess and the AcXess Managers of all claims they may have against the Company and its officers, directors, employees, shareholders, affiliates and affiliated companies and for all damages that relate to the Initial Agreement, the transactions contemplated thereby, and any matter relating to AcXess or its business, operations,assets or liabilities. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                                           |    | Three months ended June 30, |                    | Cumulative period from |
|--------------------------------------------------------------------------------|--------------|-----------------------------|-------------------------|------------------------|
|                                                                           |    | 2009                        |                    |                   | 2008 |   | from Inception to June 30, 2009 |
| Numerators                                                                     |    |                        |                    |                   |   |   |   |   |   |
| Numerators for basic and diluted earnings per share:                           |    |                        |                    |                   |   |   |   |   |   |
| Net loss from continuing operations                                            |    | $                           | (241,854                | )                      |   | $ | (249,778) |   | $   (3,993,901) |
| Net income (loss) from discounted operations                                   |         | $                           | 413,614                 |                   |   | $ | (29,081) |   | $   (1,701,731) |
|                                                                           |         |                        |                    |                   |
| Denominators                                                                   |    |                        |                    |                   |   |   |   |   |   |
| Denominators for basic and diluted earnings per share:                         |    |                        |                    |                   |   |   |   |   |   |
| Weighted average shares outstanding basic                                      |    |                        | 102,972,981             |                   |   |   | 101,637,276 |   | 85,052,610 |
|                                                                           |         |                        |                    |                   |
| Dilutive potential common shares                                               |    |                        |                    |                   |   |   |   |   |   |
| Stock options (1)                                                              |    |                        | 0                       |                   |   |   | 0 |   | 0 |
| Common stock warrants (2)                                                      |    |                        | 0                       |                   |   |   | 0 |   | 0 |
| Convertible debentures (3)                                                     |         |                        | 0                       |                   |   |   | 0 |   | 0 |
| Convertible preferred stock (4)                                                |         |                        | 150,000,000             |                   |   |   | 0 |   | 0 |
| Denominator for dilutive earnings per share                                    |    |                        | 252,972,981             |                   |   |   |   101,637,276 |   | 85,052,610 |
| Net loss income per common share  from continuing operations– basic |    | $                           | (0.00                   | )                      |   | $ | (0.00) |   | $              (0.05) |
| Net loss income per common share from continuing – diluted          |    | $                           | (0.00                   | )                 |   | $ | (0.00) |   | $              (0.05) |
|                                                                           |         |                        |                    |                   |   |   |   |   |   |
| Net income (loss) per share from discontinued operations – basic         |         | $                           |   0.00             |                   |   | $ |   (0.00) | $ |   (0.02) |
|                                                                           |         |                        |                    |                   |   |   |   |   |   |
| Net income (loss) per share from discontinued operations – diluted       |         | $                           |     0.00 |                   |   | $ |     (0.00) |   $ |     (0.02) |

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| (1) | For the three months ended June 30, 2009 and 2008, and cumulative period from Inception to June 30, 2009, none of the outstanding options were included in dilutive shares, as the effect would be anti-dilutive. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | For the three months ended June 30, 2009 and 2008, and cumulative period from Inception to June 30, 2009, none of the outstanding warrants were included in dilutive shares, as the effect would be anti-dilutive.  |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | For the three months ended June 30, 2009 and 2008, and cumulative period from Inception to June 30, 2009, none of the shares issuable upon the conversion of convertible debt were included in dilutive shares, as the effect would be anti-dilutive.  |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (4) | For the three months ended June 30, 2008 and cumulative period from Inception to June 30, 2009, none of the shares issuable upon the conversion of preferred stock were included in dilutive shares, as the effect would be anti-dilutive.             |

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| Cash payments due within ninety days of the acquisition date |   | $      | 100,000 |   |
|--------------------------------------------------------------|--------|--------|---------|--------|
| Note payable                                                 |   |   | 500,000 |   |
| Warrants                                                     |   |   | 15,000  |   |
| Total                                                        |   | $      | 615,000 |   |

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| Identifiable intangible assets |   | $ | 615,000 |   |
|--------------------------------|--------|---|---------|--------|
| Total                          |   | $ | 615,000 |   |

| (1)   | all 4,477,292 shares of the Company’s common stock held by the AcXess Managers; |
|-----------------|---------------------------------------------------------------------------------------|

| (2)   | the cancellation of options to purchase 5,978,349 shares of the Company’s common stock held by the AcXess Managers; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------|

| (3)   | a Secured Promissory Note in the principal amount of $500,000, with an 8% interest rate, interest and principal are due on June 19, 2012.  The note contains a prepayment discount schedule that allows for gradually decreasing discounts beginning with a maximum prepayment discount of $350,000 if $150,000 is paid within three monthsof the June 19, 2009 issue date. The Company has secured the note with all of the assets of AcXess with  a separate Security Agreement. The Company considers it probable that the maximum discount will be taken and  has recorded the note at the amount of $150,000 on its balance sheet at June 30, 2009.  Interest  in the amount of $1,205 was accrued during the three months ended June 30, 2009. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)   | a release from AcXess and the AcXess Managers  of all claims they may have against the Company and its officers, directors, employees, shareholders, affiliates and affiliated companies and for all damages that relate to the Initial Agreement, the transactions contemplated thereby, and any matter relating to AcXess or its business,operations, assets or liabilities. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Assets sold                                |   | $      | (27,539) |   |
|--------------------------------------------|--------|--------|----------|--------|
| Liabilities assumed                        |   |   | 271,277  |   |
| Net liabilities assumed by AcXess managers |   |   | 243,738  |   |
| Common stock returned for cancellation     |   |   | 13,432   |   |
| Note receivable issued to the Company      |   |   | 150,000  |   |
| Gain on the sale of AcXess                 |   | $      | 407,170  |   |

|                                           |   | For the Three Months Ended June 30, |   |
|------------------------------------------------|--------|-------------------------------------|--------|
|                                           |   | 2009                                |   |   | 2008 |   |
| Revenue                                        |   | $                                   | 30,606 |   |   | $ | 109,942 |   |
| Cost of goods sold                             |   |                                | 14,340 |   |   |   | 37,659 |   |
|                                           |   |                                |   |   |   |   |   |   |
| Selling, general and administrative expenses   |   |                                | 9,822  |   |   |   | 101,364 |   |
|                                           |   |                                |   |   |   |   |   |   |
| Net income (loss) from discontinued operations |   | $                                   | 6,444  |   |   | $ | (29,081 | ) |

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|                                            |   | June 30, |      |   | March 31, |   |
|-------------------------------------------------|--------|----------|-----------|--------|-----------|--------|
|                                            |   | 2009     |      |   | 2009      |   |
| Debenture; 4% per annum (increased to 9%        |   |     |      |   |      |   |
| per annum in July 2007); due December 22, 2009) |   | $        | 1,000,000 |   |      | $      | 1,000,000 |   |
| Less: Unamortized discount                      |   |     | (504,461  | )      |      |   | (664,595 | ) |
| Net carrying value                              |   | $        | 495,539   |   |      | $      | 335,405 |   |

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|     |   |   |        |   |      | Weighted     |   |   | Weightedaverage |   |   |        |   |   | WeightedAverage |   |
|----------|--------|--------|-------------|--------|-----------|--------------|--------|--------|-----------------|--------|--------|-------------|--------|--------|-----------------|--------|
|     |   |   |        |   |      | average      |   |   | exercise        |   |   |        |   |   | Exercise        |   |
| Range of |   |   | Number of   |   |      | remaining    |   |   | price of        |   |   | Number of   |   |   | price of        |   |
| exercise |   |   | options     |   |      | contractual  |   |   | outstanding     |   |   | options     |   |   | Exercisable     |   |
| prices   |   |   | outstanding |   |      | life (years) |   |   | options         |   |   | exercisable |   |   | Options         |   |
| $        | 0.03   |   |        |   | 5,000,000 |         |   |   | 4.0             |   |   | $           | 0.03   |   |            |   | 1,000,000 |   |   | $ | 0.03 |   |

|                          |   |    |       |   | Weighted Average |   |
|-------------------------------|--------|---------|------------|--------|------------------|--------|
|                          |   | Options |       |   | Exercise Price   |   |
| Outstanding at March 31, 2009 |   |    | 5,978,349  |   |             | $      | 0.14 |   |
| Issued                        |   |    | 5,000,000  |   |             |   | 0.03 |   |
| Exercised                     |   |    | -          |   |             |   | - |   |
| Forfeited or expired          |   |    | (5,978,349 | )      |             |   | 0.14 |   |
| Outstanding at June 30, 2009  |   |    | 5,000,000  |   |             | $      | 0.03 |   |
|                          |   |    |       |   |             |   |   |   |
| Non-vested at June 30, 2009   |   |    | 4,000,000  |   |             | $      | 0.03 |   |
| Exercisable at June 30, 2009  |   |    | 1,000,000  |   |             | $      | 0.03 |   |

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|     |   |   |        |       |      | Weighted     |   |   | Weightedaverage |   |   |        |   |   | Weightedaverage |       |
|----------|--------|--------|-------------|------------|-----------|--------------|--------|--------|-----------------|--------|--------|-------------|--------|--------|-----------------|------------|
|     |   |   |        |       |      | average      |   |   | exercise        |   |   |        |   |   | exercise        |       |
| Range of |   |   | Number of   |       |      | remaining    |   |   | price of        |   |   | Number of   |   |   | price of        |       |
| exercise |   |   | warrants    |       |      | contractual  |   |   | outstanding     |   |   | warrants    |   |   | exercisable     |       |
| prices   |   |   | outstanding |       |      | life (years) |   |   | warrants        |   |   | exercisable |   |   | warrants        |       |
|     |   |   |        |       |      |         |   |   |            |   |   |        |   |   |            |       |
| $        | 0.03   |   |        |       | 5,000,000 |         |   |   | 3.0             |   |   | $           | 0.03   |   |            |       | 5,000,000 |   |   | $ | 0.03 |   |
| $        | 0.05   |   |        |       | 4,446,235 |         |   |   | 0.6             |   |   | $           | 0.05   |   |            |       | 4,446,235 |   |   | $ | 0.05 |   |
| $        | 0.14   |   |        |       | 1,785,714 |         |   |   | 1.5             |   |   | $           | 0.14   |   |            |       | 1,785,714 |   |   | $ | 0.14 |   |
| $        | 0.18   |   |        |       | 1,350,000 |         |   |   | 2.5             |   |   | $           | 0.18   |   |            |       | 1,350,000 |   |   | $ | 0.18 |   |
| $        | 0.30   |   |        |       | 8,928,571 |         |   |   | 1.5             |   |   | $           | 0.30   |   |            |       | 8,928,571 |   |   | $ | 0.30 |   |
| Total    |   |   |        | 21,510,520 |      |         |   | 2.3    |            |   | $      | 0.17        |   |   |            | 21,510,520 |   |   | $ | 0.17 |   |

|                          |   | Warrants |       |   | Weighted AverageExercise Price |   |
|-------------------------------|--------|----------|------------|--------|--------------------------------|--------|
| Outstanding at March 31, 2009 |   |     | 16,510,520 |   |                           | $      | 0.21 |   |
| Issued                        |   |     | 5,000,000  |   |                           |   | 0.03 |   |
| Exercised                     |   |     | -          |   |                           |   | - |   |
| Forfeited or expired          |   |     | -          |   |                           |   | - |   |
| Outstanding at June 30, 2009  |   |     | 21,510,520 |   |                           | $      | 0.17 |   |

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Item 2. Management’s Discussion and Analysis or Plan of Operations

| (1)   | A promissory note in the amount of $1,000,000. The note will have a term of two years and will bear interest at a rate of 10% per year. The note is collateralized with all assets of AcXess and has an acceleration clause for any material default. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |                                                                                                                                                                                                                                                  |
| (2)   | A license agreement grant that gives the Company a non-exclusive worldwide right and license products under Axcess’ patents relating to Business Continuity (BC) solutions.                                                                     |

| (3)   | The return of 4,477,292 shares of common stock and the cancellation of  fully vested options to purchase 5,978,349 shares of the Company’s common stock. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (1)   | all 4,477,292 shares of the Company’s common stock held by the AcXess Managers; |
|-----------------|---------------------------------------------------------------------------------------|

| (2)   | the cancellation of options to purchase 5,978,349 shares of the Company’s common stock held by the AcXess Managers; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------|

| (3)   | a Secured Promissory Note (the “Note”) in the principal amount of $500,000, with a three year maturity date, an 8% interest rate, a prepayment discount schedule that allows for gradually decreasing discounts beginning with a maximumprepayment discount of $350,000 if $150,000 is paid within three months of the June 19, 2009 issue date, and a pledge of all of the assets of AcXess as security for the Note, as specified in a separate Security Agreement. The Company has recorded a $150,000 note receivable as of June 30, 2009, as this is the amount that is likely to be received. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)   | a release from AcXess and the AcXess Managers  of all claims they may have against the Company and its officers, directors, employees, shareholders, affiliates and affiliated companies and for all damages that relate to the Initial Agreement, the transactions contemplated thereby, and any matter relating to AcXess or its business,operations, assets or liabilities. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Item 3. Controls and Procedures

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Item 1. Legal Proceedings

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Item 3. Defaults Upon Senior Securities

Item 4. Submission of Matters to a Vote of Security Holders

Item 5. Other Information

Item 6. Exhibits.

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SIGNATURES

|                       | Innovative Software Technologies, Inc. |
|----------------------------|----------------------------------------|
|                       |                                   |   |
| Date: August 19, 2009 |                                   | /s/ Robert V. Rudman                           Robert V. RudmanChief Executive Officer andChief Financial Officer |

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